Maritime territorial disputes in Asia and China’s economic “rebalancing” are among key risks facing the region this year, according to Aon’s annual Political Risk Map.

“Economic challenges and border disputes in Asia will encourage nationalism,” Aon says. “In some cases, there will be increased defence spending and military shows of strength.

“The effect of this trend is seen through the minor escalations in the long-standing territorial disputes in the East and South China Seas.”

Claims by China and its less powerful neighbours on disputed waterways, believed to be rich in energy deposits, have led to growing militarisation.

China’s bid to steer its export-led economy towards one driven by consumption also has implications for the region, Aon says.

“The rebalancing and slowing of the world’s second-largest economy is likely to present challenges for China’s neighbours and key trading partners, who could experience higher political and economic risks as the pace and composition of growth changes.

“Recently there have been signs of an improvement in the communication of policy, but risks remain, particularly around the building up of further leverage in the Chinese banking system.”

The map analyses political risk in 162 emerging markets.

Falling oil prices top the list of threats to emerging-market investors, as oil-producing nations face increasing pressure to find alternative growth drivers.

These countries include Russia, Venezuela, Libya and Iraq.

“Oil-producing nations must find substitutes for lost revenues, which will put pressure on their corporate sectors at a minimum through tax regime adjustments and at the extreme through [floats] of state-owned enterprises,” Aon Risk Solutions Head of Political Risk Matthew Shires said.

“With no sign of oil prices returning to previous levels, turbulence in many oil-producing states is likely to continue, and could worsen.”